COVID, bottlenecks shroud German economic outlook

COVID, bottlenecks shroud German economic outlook

FRANKFURT: The German central bank on Friday lowered its outlook for growth in Germany next year and upped its inflation forecast, as supply chain bottlenecks and the pandemic put Europe’s biggest economy under pressure. The Bundesbank expected Germany to grow by 4.2 percent in 2022 on a seasonally adjusted basis, down from a previous forecast of 5.2 percent, made in June this year.

“The recovery has been somewhat pushed back,” outgoing Bundesbank President Jens Weidmann said in a statement. In June, the Frankfurt-based institution had predicted that the economy could reach its pre-crisis level from the end of 2019 “this summer”.

But the anticipated recovery failed to materialize, with the economy still lagging behind the pre-pandemic marker by one percent in the third quarter of 2021, according to the Bundesbank.

Germany suffered a “pandemic-related setback” in the second half of 2021, the bank said, revising down its estimate for growth in 2021 to 2.5 percent from 3.7 percent. The country has imposed new health restrictions as it contends with a punishing fourth wave of the coronavirus, barring unvaccinated individuals from non-essential commerce and many public venues.

Growth would “gather pace again in early 2022”, as the restrictions fell away and the supply situation improved,